Taxpayers should be aware of their rights, which they possess under law, on matters relating to taxation.
Voluntary disclosure is revealing matters to the IRD (before they find out) regarding aspects of your taxation obligations and liabilities. If something is wrong with your tax returns, the IRD encourages you to tell them about it so that it can be corrected as soon as possible. This is called making a “voluntary disclosure”.
Diverting personal services income by structuring revenue earning activities through an associated entity such as a trading trust or a company may cause Inland Revenue to consider such arrangement as tax avoidance.
IRD take fraud seriously. Their systems are designed to prevent people from receiving refunds they aren’t entitled to. They’re also designed to protect your personal information.
You need to keep a close watch on your bank accounts if you owe IRD money for overpayment of Working for Families credits or for overdue Child Support payments.
You are probably operating a business if you charge other people for the goods that you have made or the services that you provide. It will also be looked on as a business if you are supplying the goods or services on a regular basis and there is a clear intention to make a profit from your activities.
A small number of people try to avoid paying the tax they should or boost entitlements to social benefits by using inappropriate or unlawful tax structures. IRD call this - aggressive tax planning (ATP). Inland Revenue will investigate if they suspect your planning is not quite on the level.
Although IRD is not required either to alert taxpayers when considering whether to audit or advise that an audit has begun, the IRD’s practice is that a taxpayer will generally be given notice, in writing, advising them that they have been selected for an audit, or that an audit is underway.
The specific issues that IRD are currently looking at include:
The partnership is not taxed in its own right because the profits made are distributed to the partners. The partners then pay tax on those profits in their own name. That is, the profit or loss of the partnership will be apportioned between the partners in accordance with the ratio already determined in their agreement.